Asia stocks mixed on political tensions, ECB rate cut hopes

Asian equities were mixed on Tuesday as investors reacted to the latest flare-up of tensions in the South China Sea and the prospect of further monetary easing in Europe.

Early on Tuesday, Reuters reported that the head of Vietnam's coastguard accused China of sinking another one of its fishing vessels in the disputed waters of the South China Sea. There has been no immediate comment from Beijing regarding the incident.

Sony ended 0.1 percent higher following a 1 percent rally earlier in the session after CEO Kazuo Hirai said on Monday that the firm is betting on network services like streamed games and movies to help drive growth.

"Perhaps the strength in Japanese equities is more a factor of positioning ahead of some key events for Japan heading into the back end of the week [retails sales data on Thursday and inflation data on Friday]. Some traders have suggested the fact that the Nikkei is trading through the top band of the Ichimoku cloud is encouraging some near term buying," said Stan Shamu, market strategist at IG.

It's time to stop bashing Asia: AllianceBernstein

With political and economic changes underway in India, Japan and China, a re-evaluation of Asia will be necessary, says Hayden Briscoe, Director, Asia Pacific Fixed Income at AllianceBernstein.

China shares decline

News that China is simplifying procedures for investment projects was unable to lift sentiment in mainland and Hong Kong markets. The Shanghai Composite snapped its two-day winning streak to close 0.3 percent lower while the Hang Seng Index dipped 0.2 percent

In a move to reduce bureaucracy, the National Development and Reform Commission said on Monday that authorities should not arbitrarily delay approval deadlines for investment projects.

Australia's benchmark index retreated from a one-month high hit earlier in the session after data showed consumer confidence fell 1.1 percent in the week ending May 25 following the government's tough federal budget.

Suncorp lost 2 percent after warning of a A$500 million writedown in its life insurance business.

Treasury Wine Estates fell 1 percent after hinting that it will not engage with Kohlberg Kravis Roberts after its board sent a letter to shareholders explaining the rationale for rejecting the private equity's firm $3.05 billion bid.

Rio Tinto rose 0.4 percent after its deal with Chinalco and the International Finance Corp for the $20 billion Simandou iron ore project in Guinea finally received approval after repeated delays.

Kospi down 0.6%

South Korean shares fell to a two-week low, extending losses into a second session, after the Bank of Korea's consumer sentiment index fell to an eight-month low in May.

"We think the 3-point fall from April is the first evidence of a macro impact in May from the Sewol disaster. The May statement said the committee would be closely monitoring the movements in domestic demand following the Sewol ferry accident," said Tim Condon, head of research, Asia at ING Financial Markets.